Thailand’s secondary gateways holding up better than Bangkok

Airports of Thailand (AoT), operator of the country’s major international airports, reported a 6.3% year-on-year reduction in passenger numbers in Jul-2009, but passenger numbers had already started falling in the same month last year (by 1.3%), meaning the decreases are now compounding.

On the surface, AoT’s premier airport, Bangkok Suvarnabhumi, appears to be holding up, with total volumes down just 1.4% last month, but the figure reflects the transfer of domestic volumes from Don Muaeng Airport. Domestic passenger numbers rose 51.5%, while international traffic at Suvarnabhumi was down 12.9% last month (following a 1% increase last July).

AoT’s combined cargo traffic entered negative territory in Aug-2008, and it looks likely that decreases could also start to compound when traffic figures for Aug-2009 are released.

AoT total passenger number growth and cargo volume growth: Aug-08 to Jul-09

Overall domestic passenger volumes at AoT airports are back into positive territory, rising 5.9% in Aug-2009, erasing all of the previous year’s fall. But even bigger reductions were recorded in subsequent months last year, while could make for quite spectacular increases in coming months. The reality is, growth could be little changed from 2007 levels.

AoT domestic, international and total passenger number growth: Aug-08 to Jul-09

Traffic at the two Bangkok airports was down a combined 9%+ last month, whereas Phuket was down just 3.1%. Chiang Rai Airport has recovered last year’s fall, while Chiang Mai came close to doing likewise.

V Australia’s announcement to launch direct services to Phuket from Melbourne and Brisbane later this year could reflect a growing trend of airlines (and passengers) wishing to avoid the Bangkok hub. Thai Airways’ financial troubles, relative to its Asia Pacific and Middle East peers are also expected to weaken the Bangkok hub’s outlook.

Want more analysis like this? CAPA Membership gives you access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.Find out more and take a free trial.

You may also be interested in the following articles...

Vueling's new CEO, Javier Sanchez-Prieto, is leading a programme ('Vueling NEXT') to improve its profitability, both through revenue enhancement and cost efficiency gains. Among other aims this hopes to reduce Vueling's high levels of seasonality, to raise aircraft utilisation and to improve labour productivity. Given ambitious financial targets by IAG – action is needed.

Part 1 of CAPA's analysis of Vueling examined its capacity growth and profitability trends since its acquisition by IAG in 2013. Vueling's operating margin and return on invested capital are on a downward trend, hence the new initiative to reverse these trends.

This second part of CAPA's analysis considers the profit improvement programme. During this programme Vueling's fleet will remain broadly flat to 2018, before resuming growth thereafter. Focus markets for Vueling are domestic Spain and Spain-Europe. It has strengths in these markets but faces growing competition from its lower-cost rival Ryanair, which has also been raising its service quality – closing the gap to Vueling's more premium positioning on the LCC spectrum.

Since the end of 2015 Vueling has slipped from being IAG's best performer on the key financial metric of return on invested capital to its worst performer for the four quarters ended 3Q2016. The group's LCC has suffered more than its sister airlines from disruption in Europe, caused by ATC strikes and terrorist activity.

However, since its acquisition by IAG in 2013 Vueling's revenue growth has not matched its capacity growth and unit costs have grown. The benefits of lower fuel prices have been dissipated by higher ex-fuel unit costs, including lower labour productivity. Vueling's new CEO, Javier Sanchez-Prieto, is now leading a programme ('Vueling NEXT') to improve its profitability.

Part 1 of this CAPA analysis of Vueling examines its capacity growth and profitability trends since becoming part of IAG. It also looks at the development of its RASK and CASK. Part two will highlight the seasonality in Vueling's schedule and look at the profit improvement programme.